The Hong Kong Monetary Authority announced today the results of its latest survey on residential mortgage loans (RMLs) in negative equity1.
The number of RMLs in negative equity reduced by about 40% over the three-month period to end-March to about 40,0002 cases with an aggregate value of HK$66 billion. The unsecured portion of these loans is estimated at about HK$13 billion, down from HK$23 billion at end-2003. The overall loan-to-value ratio on negative equity loans dropped to 125% from 128% at end-2003 as a result of upward revaluation in the collateral coupled with reduced outstanding balances arising from continued loan repayments. Reflecting the higher associated risks of loans left in the portfolio, the weighted average interest rate of the outstanding negative equity RMLs was 0.74% below the best lending rate (BLR), compared with 0.94% below BLR at end-2003.
The three-month delinquency ratio of negative equity RMLs3 increased to 2.19% from 2.11% at end-2003, due largely to the contraction in the total outstanding value of RMLs in negative equity. The amount of delinquent negative equity RMLs, in fact, decreased by more than 35%, alongside the improving economic conditions which helped strengthen homeowners' repayment ability.
For details, please refer to the Annex.
For further enquiries, please contact:
Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480
Hong Kong Monetary Authority
5 May 2004
1 The mortgage portfolio of the surveyed authorized institutions represents about 98% of the industry total. The survey results have been extrapolated to approximate the position of the banking sector as a whole.
2 The figures derived from the survey relate only to RMLs provided by authorized institutions on the basis of first mortgages and which the reporting institution knows to be in negative equity (i.e. the outstanding loan amount with the reporting institution exceeds the current market value of the mortgaged property). Not included in these figures are some 67,600 RMLs associated with government-funded co-financing schemes and another 29,920 RMLs associated with private sector co-financing schemes. The extent to which such RMLs are in negative equity, taking into account the second mortgage, is not known because authorized institutions do not maintain records on the outstanding balances of the second mortgages.
3 Negative equity RMLs delinquent for more than three months as a percentage of total negative equity RMLs.